Aussie dollar hits three-year low
THE Australian dollar fell to its lowest levels against the greenback in nearly three years on Wednesday.
Just after 3pm on Wednesday the Aussie was buying US70.08c, down US0.45c from Tuesday and down 0.64 per cent on the day.
It crashed between 12.22 pm and 1.39 pm, dropping from US70.436c to a low of US70.02c. The last time it was so low was in January and February 2016, when it traded as low as 68.28 cents against the greenback.
By 4.20pm the currency had recovered slightly to be trading around US70.21c.
Commsec market analyst James Tao attributed the dip to Chinese manufacturing data that came in weaker than expected.
"China of course being a major trading partner, it's a big part of our economy," he said.
If the US hikes interest rates two or three times this year, as expected, while Australia only hikes rates once, that could put more pressure on the Aussie as investors move their money to the USA to get better returns, Mr Tao said. The Reserve Bank of Australia has held rates at a record low level of 1.50 per cent since last easing in August 2016.
The US Federal Reserve raised rates in December to a range of 2.25 to 2.5 per cent, its ninth such move since late 2015.
In 2018 the Aussie tumbled almost 10 per cent, wiping out the previous year's 8.7 per cent gain.
Australian government bond futures, meanwhile, have jumped to a two-year peak, with the three-year bond contract rising two ticks to 98.22. The 10-year contract climbed to the highest since mid-2017 to 97.705.